Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2016 (3) TMI AT This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2016 (3) TMI 1042 - AT - Central Excise


Issues Involved:
1. Entitlement to capital goods CENVAT Credit for electricity partially wheeled out.
2. Entitlement to CENVAT Credit on input services for electricity generation.
3. Compliance with Rule 6(3)(i) of the Cenvat Credit Rules, 2004 for the period April 2011 to February 2014.

Issue-wise Detailed Analysis:

1. Entitlement to Capital Goods CENVAT Credit:
The appellants, M/s JSW Steel Coated Products Ltd., installed a captive power plant and availed credit of capital goods duty. The Revenue contended that since part of the electricity generated was wheeled out, the appellants were not entitled to capital goods CENVAT Credit. The Tribunal clarified that under Rule 6(4) of the Cenvat Credit Rules, 2004, CENVAT Credit is disallowed only if capital goods are used exclusively for manufacturing exempted goods. Since the electricity generated was partially used for dutiable goods, the capital goods were not exclusively used for exempted goods, thus the appellants were entitled to CENVAT Credit. The Tribunal referenced the decision in H.E.G. Ltd. - 2012 (275) ELT 315 (Chhattisgarh), which supported this interpretation.

Furthermore, for items listed in Annexure-B of the show-cause notice, the Tribunal noted that if these items could be treated as inputs, credit should be allowed. The Tribunal cited Bhilai Steel Plant - 2010 (261) ELT 612 (Tri-Del) and Modi Rubber Ltd. - 2000 (119) ELT 197 (Tri-LB) to support this. Items at Sr. No. 32, 58, and 64 were also considered capital goods, and credit could not be denied without reason.

2. Entitlement to CENVAT Credit on Input Services:
The Revenue argued that the appellants were not entitled to CENVAT Credit on input services as the electricity generated, part of which was sold, did not attract Central Excise duty. The appellants maintained that they took credit only for the proportion of electricity used captively. The Tribunal referred to the Supreme Court's decision in Maruti Suzuki Ltd. - 2009 (240) ELT 641 (SC), which allowed proportionate credit for inputs used in electricity generation for captive consumption. The Tribunal concluded that since the appellants meticulously maintained records and took credit proportionately, Rule 6(1) did not apply, and they were entitled to the credit.

3. Compliance with Rule 6(3)(i) of the Cenvat Credit Rules, 2004:
For the period April 2011 to February 2014, the Revenue alleged that the appellants failed to maintain separate accounts for inputs and input services used in generating electricity for captive use and for sale, requiring them to pay an amount equal to 5% (up to 31.3.2012) and 6% (from 1.4.2012 onwards) on the value of electricity sold to MSEB. The Tribunal referenced the decision in MIRC Electronics - 2015 (38) STR 199, which held that Rule 6(3) applies only if ineligible credit is taken. Since the appellants took credit only to the extent eligible, Rule 6(3)(i) could not be invoked. The Tribunal set aside the impugned order, confirming that the appellants complied with the provisions of the Cenvat Credit Rules, 2004.

Conclusion:
The Tribunal allowed the appeals, confirming the entitlement to capital goods and input services CENVAT Credit and compliance with Rule 6(3)(i) of the Cenvat Credit Rules, 2004. The judgments were pronounced in court.

 

 

 

 

Quick Updates:Latest Updates